Bitcoin Enters the “Banana Zone”? Understanding the Price Surge and Hidden Risks Behind Market Frenzy

05/11/2025

In the Crypto Sphere, When You Hear “Banana Zone”

Don’t think it’s just a funny meme; this term was proposed by macro investor Raoul Pal to describe the “banana-shaped” chart pattern when Bitcoin enters a phase of crazy price surges. It represents a market frenzy characterized by skyrocketing prices, heightened emotions, and a mix of risks and opportunities. So, is Bitcoin stepping into the Banana Zone again in 2025? This article will explore the answer.

What is the “Banana Zone”? A Period of Crazy Price Surge

The so-called Banana Zone is a phase in the cryptocurrency market cycle, characterized by a parabolic price surge resembling the arc of a banana. Such an increase is usually accompanied by high volatility, market euphoria, and investor FOMO (fear of missing out). Historically, Bitcoin has experienced several Banana Zones:

2013: BTC skyrocketed from $100 to $1,000
2017: BTC surged from $5,000 to nearly $20,000
2024: From $20,000, it broke through to $69,000, with some data even indicating a peak above $73,000 in March

These surges are not solely driven by retail investors but also propelled by macroeconomic factors such as increased global liquidity and central bank easing policies.

Five Key Characteristics of the Banana Zone: It’s Not Just Bitcoin Going Crazy

Market Euphoria and the FOMO Effect

When the media starts reporting frequently, retail investors flood into the market, and even taxi drivers are chatting about Bitcoin, you may already be in the Banana Zone. This phenomenon often leads to excessive leverage and irrational investments.

Altcoins Take the Spotlight: The Banana Singularity?

After an initial surge in Bitcoin, funds often flow into higher-risk altcoins, triggering a “Altcoin Season” or “Banana Singularity.” During this time, some smaller coins may experience hundredfold surges.

Macro Economics as the Key Driver

According to Pal’s “Everything Code” theory, the emergence of the Banana Zone is highly correlated with the global capital cycle, particularly in the last quarter of U.S. presidential election years, where easing policies tend to elevate asset prices.

High Volatility and Corrections Are the Norm

Don’t be blinded by the sweetness of bananas! This rising period is also often accompanied by dramatic corrections of 30% to 34%. Even in a bullish trend, significant pullbacks are inevitable.

Indicators Reveal Entry Timing

Analysts observe various indicators to predict the arrival of the Banana Zone, including stablecoin inflows, ETF inflow and outflow trends, miner selling pressure, and the well-known MVRV Z-Score.

Current Status of Bitcoin in 2025: Has the Banana Zone Been Activated?

As of May 2025, Bitcoin’s price has retraced about 30% from its peak and then rebounded to $104,000. This trend resembles the early stages of past Banana Zones. However, according to technical analyst Rekt Capital, the market is currently still in the consolidation phase following the “first phase” of the Banana Zone.

Another analyst, Raoul Pal, believes that if BTC stabilizes above the $70,000 to $72,000 range, it will officially enter the second phase of the Banana Zone, at which point the performance of altcoins may become even crazier.

Key Observational Indicators: What Signals to Watch For?

Miner Selling Pressure Eases: After March 2024, miner revenues dropped significantly by about 55%, leading to reduced selling pressure, which is conducive to price increases.
Stablecoin Funds Flow Back: In mid-2024, stablecoin reserves fell by 10% to $21.96 billion, but if funds flow back in, it will boost overall market liquidity.
ETF Outflows Slow Down: If Bitcoin ETFs from firms like Fidelity and Grayscale see reduced redemptions, market pressure will further decrease.
MVRV Z-Score: This indicator is used to determine if the market is overheated. A score of 4 to 7 indicates entry into the Banana Zone; the current score is approximately 2.85, suggesting the market is still in its early stages.

Why is it Called “Banana”? It’s a Bit Casual Yet Real

The term “Banana Zone” itself is not a rigorous academic term; it’s more of a visual metaphor. Some believe it’s because the price chart resembles a banana shape, while others feel that Bitcoin is like a banana—sweet when ripe but rotten if overripe, symbolizing the potential for sudden failure.

Investment Advice and Risks: How to Avoid “Slipping” in the Banana Zone?

Opportunities:

The Banana Zone could bring high returns, especially for mainstream coins like BTC, ETH, and SOL. Raoul Pal suggests focusing on leading coins and avoiding excessive bets on high-risk small coins.

Risks:

Don’t be swept away by market euphoria. Indicators such as an extreme greed index (Fear & Greed Index above 90), large holders starting to sell, and excessive media hype are all signals that the market may be about to reverse.

Strategies:

Regularly monitor indicators like the MVRV Z-Score, whale fund movements, and Bitcoin’s market share. Set profit-taking points to avoid being the last one holding the bag.

The Banana Zone is one of the most exciting yet dangerous phases in the Bitcoin market. It symbolizes the potential for explosive growth but also the risk of bubbles. The 2025 market seems to be gearing up, but has it truly entered the Banana Zone? Multiple market signals still need to be observed. On this slippery banana peel of speculation and investment, remember: before you slip, make sure to see the direction clearly.

Risk Warning

Investing in cryptocurrencies carries a high level of risk, and their prices can be extremely volatile; you may lose your entire principal. Please carefully assess the risks.